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Of course, slower growth is inevitable for all companies as they mature. Add to that the fact that these companies are leaders in industries that have undergone seismic shifts in just about every way you can imagine. Some have done a better job of staying relevant than others. But, it's an axiom that when one tech wave gives way to another, leaders in the old wave rarely transfer their leadership to the new wave. Some of them don't even survive: think Wang or Digital Equipment.
Now take a look at the revenue-growth rate averages of five companies that are considered rising stars in tech from 2002 to 2012: Apple, Google, Rackspace, Salesforce.com and Cognizant.
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And finally, take a look at the revenue-growth rate averages of five mature companies in mature industries, Altria, AT&T, Johnson & Johnson, Philip Morris and Verizon:
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I'm sure I don't have to spell out the obvious -- but I will. The growth rates of the tech leaders of the 1980s and 1990s now more closely resemble those of mature companies in mature markets than those of the new leaders in new tech markets of the 2000s.
In other words, the world has changed for solution providers. The rising stars they relied on 30, 20 or even 10 years ago are out of their growth phase, and they're not going back. As a result, the fundamentals of Microsoft today have more in common with those of Philip Morris than Apple.
So if you're a solution provider and your growth is slowing, margins declining and valuations slipping, look to your stable of partners and, with a clear eye, ask yourself if you're betting on the wrong horses. If you are, make a different bet and change horses.
That may seem risky. But, it's less risky than plodding on with a plow horse to the very end.
Marty Wolf is Founder and President of martinwolf | M&A Advisors. Marty has been directly involved in the divestiture of six Fortune 500 divisions and has completed more than 115 transactions in the IT Services sector. A frequent commentator and guest blogger for leading business and IT media outlets, Marty also acts as a counselor and trusted advisor to CEOs of select IT firms.
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